July 24, 2020 / 2:43 PM / 11 days ago

TREASURIES-Yields mixed as supply and Fed meeting loom

    CHICAGO, July 24 (Reuters) - U.S. Treasury yields were mixed
on Friday amid sinking stocks and ahead of next week's Federal
Reserve meeting.
    The benchmark 10-year yield was last up less
than a basis point at 0.5888%.
    Priya Misra, head of global rates strategy for TD Securities
in New York, said the 10-year yield, which is near the low end
of the range where it has been trading at since March, may break
lower as more supply looms to fund another potential round of
fiscal aid from Washington to fight the economic fallout from
the coronavirus pandemic. 
    "I think we're breaking out. We're going lower in yields
because of what's happening with risk assets, data momentum
seems to be slowing. So my view is it's going to decline," she
said.
    U.S. Senate Republicans will unveil their proposal next week
for a fresh round of coronavirus aid, including more direct
payments to Americans and a partial extension of enhanced
unemployment benefits, Senate Majority Leader Mitch McConnell
said on Thursday.
    Meanwhile, Fed policy makers will meet next week, although
expectations are low for any surprises. 
    "I don't think people expect much from the Fed, but they do
expect continued dovish rhetoric," Misra said. 
    Wall Street opened lower as U.S.-China tensions and fears
over mounting coronavirus cases weighed on the market.

    After auctions this week of $17 billion of 20-year bonds and
$14 billion of 10-year Treasury-Inflation Protected Securities
(TIPS), the U.S. Treasury will offer $141 billion of two-, five-
and seven-year notes next week.  
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down less
than a basis point at 0.1453%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 44.20 basis points, about 2
basis point higher than at Thursday's close.
July 24 Friday 9:26AM New York / 1426 GMT
                               Price                  
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1125       0.1141    -0.003
 Six-month bills               0.1325       0.1344    0.000
 Two-year note                 99-246/256   0.1453    -0.004
 Three-year note               99-224/256   0.1672    -0.005
 Five-year note                99-232/256   0.2692    0.003
 Seven-year note               100-100/256  0.4427    0.005
 10-year note                  100-88/256   0.5888    0.007
 20-year bond                  101-172/256  1.0314    0.002
 30-year bond                  100-4/256    1.2494    -0.001
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.25         0.50    
 spread                                               
 U.S. 3-year dollar swap         4.75         0.50    
 spread                                               
 U.S. 5-year dollar swap         3.00        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -42.75         1.00    
 spread                                               
                                                      
 


 (Reporting by Karen Pierogd; editing by Jonathan Oatis)
  
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